UMDNJ in 'stable' condition, bond rating agency says

Star-Ledger File PhotoWorkers unload a 2,700-ton chiller, a machine that will help air condition more than 1 million square feet of space at the University of Medicine and Dentistry of New Jersey's hospital in Newark.

NEWARK — Though a state task force is considering a plan to break up its schools, the University of Medicine and Dentistry of New Jersey's financial outlook is "stable," according to a new report by a bond rating agency.

Fitch, a New York-based rating firm, gave UMDNJ an "A-" credit rating earlier this week. That is the same rating the Newark-based university was granted in 2009.

After years of financial questions and legal and ethical problems, UMDNJ’s enrollment is growing and revenue is gradually increasing, Fitch’s analysts said.

"This improvement is largely attributable to active planning on the part of senior management to address the unique challenges that the university faces," the Fitch report said.

Fitch’s credit ratings, which range from "AAA" to "D", could impact the cost of UMDNJ’s future borrowing. The current "A-" rating applies to more than $458 million in UMDNJ bonds.

UMDNJ touted the rating on its website and in press releases this week. It is a rare piece of good financial news in a year when the 6,000-student university is facing an uncertain future.

A task force appointed by Gov. Chris Christie is studying a proposal to give UMDNJ’s public health school and one of its medical schools to Rutgers University. Rutgers officials support the idea. UMDNJ officials are opposed to giving away any of UMDNJ’s eight medical and dental schools.

Moody’s, another credit rating agency, downgraded UMDNJ’s bond rating in 2006 and placed the school on a watch list following a federal investigation into corruption and misspending.

In its latest report in 2009, Moody’s gave UMDNJ a Baa2 rating and considered the school a moderate credit risk with a negative financial outlook.

The new Fitch report said there are still concerns about UMDNJ’s future. They include the growing cost of treating a high number of charity care patients at UMDNJ’s University Hospital in Newark, the report said.